House approves bill reforming MUP pension on final reading

The House of Representatives approved on third and final reading a consolidated bill reforming the pension system for military and other uniformed personnel (MUP).

In a statement Tuesday, Speaker Ferdinand Martin Romualdez said the final vote was 272-4 with one abstention.

The chamber approved the bill early Tuesday morning.

House Bill (HB) No. 8969 or Military and Uniformed Personnel Pension System Act covered retirement, benefits, creation of trust funds, mandatory contribution for new entrants, and annual salary increase.

"With this reform, we're not only prioritizing the well-being of our MUP but also ensuring the country's economic stability. It is a testament to our commitment to national security and fiscal responsibility,” said Romualdez, the principal author of the bill.

Two MUP trust funds are created with the proposed law — one for the Armed Forces of the Philippines (AFP) and another for uniformed personnel services.

An MUP trust fund committee chaired by the secretary of Finance will administer the funds. The Government Service Insurance System (GSIS), meanwhile, will serve as manager of the trust funds.

To earn money for these trust funds, new MUP entrants will have to give a mandatory monthly contribution, which is 9% of their salary, with the national government contributing 12%.

Other sources for the trust funds include augmentations from unprogrammed appropriations in the annual national budget, proceeds from lease, joint development and disposition of government properties, and government savings.

As the MUP trust funds will be exempt from all taxes, assessments, fees, charges, or duties of all kinds, the trust fund committee is mandated to provide assistance to indigent pensioners.

A 3% annual salary increase will be given to MUP for the first 10 years from the time the proposed law takes effect under the proposed measure.

For new entrants or those who entered the service after the enactment of this bill, retirement pay will be 50% of their base pay plus longevity pay in case of 20 years of service.

It would increase by 2.5% for every year of service beyond 20 years to a maximum of 90% for 36 years of service and over.

The pension of retired MUP and survivorship pension of survivors shall be automatically indexed at a rate not exceeding 100% of the increase in the base pay of active MUP holding the same rank during the same year.

For those in active service before the bill's enactment, their monthly retirement pay shall be 50% of the base pay and longevity pay of the grade next higher to the salary grade they last held in case of 20 years of service.

It would increase by 2.5% for every year of service beyond 20 years to a maximum of 90% for 36 years of service and over.

These retirees have the options to receive in advance in one lump sum his retirement benefits for 36 months and get his monthly pension after three years, or receive his pension as it accrues after his retirement.

In the case of MUPs killed or wounded in action resulting in total permanent disability, retirement pay is computed at 90% of their base pay plus longevity pay, regardless of years of service.

Under the bill, mandatory retirement age is 57, or upon accumulation of 30 years of active service, whichever comes later. An MUP, however, may voluntarily retire after 20 years of service.

For key officers, retirement is upon completion of tour of duty or upon relief by the President.

MUP killed in action or wounded in action resulting in total disability as certified by their respective services shall be considered compulsorily retired for purposes of computing their benefits.

Punishment will be imposed for fraud, falsification, misrepresentation of facts, collusion or any similar anomaly in the issuance of documents in connection with the new pension system.

Violators will face a fine of not less than the amount defrauded but not more than three times such amount, or imprisonment of six months and one day to six years, and perpetual disqualification from holding public office and practicing any profession licensed by the government.

The Department of Finance (DOF) secretary is mandated to issue implementing rules and regulations.

It will be done in consultation with the secretaries of national defense, interior and local government, justice, transportation, environment and natural resources, budget and management, and the GSIS president and general manager. 

'No' vote

Kabataan party-list Representative Raoul Manuel said he voted “no” against the bill because active MUPs have been exempted from the reforms and another salary increase set for MUPs.

“In exempting active MUPs from contributing to the pension funds, it will become too burdensome for the government before the trust fund becomes self-sustaining. This is why this representation votes NO to House Bill 8969,” he said in a statement.

“Matagal nang lumalaki ang sahod at pensyon ng pulis at militar. Dati naipasa ang House Joint Resolution No. 18 and Senate Joint Resolution No. 11 na nagdulot ng 72.19% average increase sa sahod ng mga pulis at militar, pati na din sa iba nilang emoluments. Higit pa sa sapat ang nakukuha nila lalo ng matataas na opisyal,” he added.

(The salary of police and military personnel have been increasing for a long time. In previously passed House Joint Resolution No. 18 and Senate Joint Resolution No. 11, their salary were increased by 72.1% on average including their other emoluments. The high-ranking officials have been receiving more than enough.)

In March, Finance Secretary Benjamin Diokno warned that failure to address the ballooning cost of pensions for retirees could lead to a "fiscal collapse." —KBK, GMA Integrated News